Wyman v. Ayer Properties: SJC Holds That Economic Loss Doctrine Inapplicable In Condominium Construction Defect Claims
In an important ruling which will make it less difficult for condominium associations and trustees to seek redress for faulty or defective construction, the Supreme Judicial Court, [enhanced version available to lexis.com subscribers], has jettisoned the “economic loss doctrine” in the condominium context and affirmed a $300,000 plus judgment against a Lowell based real estate construction company over faulty construction at a condominium. A free link to the basic opinion can be found here.
The economic loss doctrine provides that a claimant must suffer some sort of property damage or personal injury in a negligent construction claim before being able to recover compensatory damages. The strict application of the economic loss doctrine in condominium construction defects was often the “magic bullet” used by insurance companies to defend these claims. Using some much needed common sense, the court held that the doctrine should not apply strictly in the condominium setting due to the peculiar nature of a condominium ownership structure with the association/trustees owning the common areas but with unit owners having contracts with the developer.
Going forward, condominium trustees will likely have more success in recovering their losses for defective construction against developers over common areas. On the flip side, insurance premiums for construction companies may rise due to the increased liability exposure.
View more from The Massachusetts Real Estate Law BlogLaw By Richard D. Vetstein, ESQ
Mr. Vetstein has represented clients in hundreds of lawsuits and disputes involving business, real estate, construction, condominium, zoning, environmental, banking and financial services, employment, and personal injury law.
In real estate matters, Mr. Vetstein handles residential and commercial transactions and closings. In land use, zoning, and licensing matters, Mr. Vetstein offers his clients an inside perspective as a former board member of the Sudbury Zoning Board of Appeals. Mr. Vetstein has an active real estate litigation practice, and was a former outside claims counsel for a national title company.
Drawing on his own business degree and experience, Mr. Vetstein assists his business clients with new business start ups, acquisitions, sales, contract, employment issues, trademarks, and succession planning. Mr. Vetstein also litigates, arbitrates and mediates a wide variety of commercial disputes.
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